Lead market supply and demand both decline, lead prices continue in the doldrums [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,988.5/mt, fluctuated rangebound during the Asian session, and continued to decline to around $1,980/mt after entering the European session. After consolidating horizontally, it rebounded to a high of $1,993.5/mt, and finally closed at $1,981.5/mt, down $10.5/mt or 0.53%.

Overnight, the most-traded SHFE lead contract opened at 17,065 yuan/mt, touched a high of 17,130 yuan/mt at the beginning of the session, then fluctuated downward all the way, explored a low of 17,050 yuan/mt, and fluctuated rangebound before finally closing at 17,055 yuan/mt, down 10 yuan/mt or 0.06%.

On the macro front, US PPI rose 0.3% MoM in September, and core PPI rose 0.1% MoM, both accelerating significantly from the previous values, indicating that US inflation heated up again in September. The Russia-Ukraine conflict made significant progress. US President Trump said that his team had made significant progress in ending the Russia-Ukraine conflict over the past week. The 28-point peace plan originally drafted by the US has been refined, and only a few differences remain.

Spot fundamentals:

In the Shanghai market, Chihong lead was quoted at a premium of 0-50 yuan/mt against the SHFE lead 2512 contract. The trading center of SHFE lead continued to move lower, and the front-month contract almost fell below the 17,000 yuan/mt mark. Suppliers' willingness to sell declined, and most raised their quoted premiums. The quoted discount for cargoes self-picked up from primary lead production sites (against the SHFE lead 2601 contract) also narrowed. More lead smelters mainly shipped under long-term contracts, and spot order quotations were relatively firm. Downstream enterprises adopted a wait-and-see attitude and purchased cautiously, with a small portion making just-in-time procurement. Market trading activity declined. Inventory: On November 25, LME inventory fell 700 mt to 264,575 mt.

According to SMM, as of November 24, the total social inventory of lead ingots in five regions tracked by SMM stood at 37,000 mt, down 1,500 mt from November 17 and down nearly 700 mt from November 20.

Today's lead price forecast:

Recently, differences in refined lead supply across regions persist. Some primary lead smelters in south China and east China have not yet resumed production after maintenance and production cuts, limiting market circulating cargoes. Suppliers maintained premium quotations. In contrast, primary lead supply is relatively ample in regions such as Henan, making it relatively difficult to conclude deals at premiums. Lead prices continued to fluctuate in the doldrums, testing the cost support of secondary refined lead. Some secondary refined lead smelters saw a slight decline in production enthusiasm and were reluctant to sell existing inventory, holding prices firm. Downstream just-in-time demand still mainly focused on primary lead. Consumption in the end-user EV and automotive sectors weakened slightly. Both supply and demand in the spot market declined. Lead prices may continue to fluctuate in the doldrums. Subsequent continuous attention is still needed on the cost support of secondary refined lead and changes in the supply side.